Google Punished after Missing Earnings

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Google Punished after Missing Earnings

Published on Friday, 20 January 2012 16:56 Written by David Becker

NASDAQ:GOOG New York, January 20^th (TradersHuddle.com) – Thursday evening after the bell Google, Inc (NASDAQ: GOOG) released earnings along with a number of other tech titans. Unfortunately for the search engine king, most of the bad news focused on Google's earnings. The search giant's earnings rose 6 percent to $2.71 billion or $8.22 per share in the fourth quarter. Excluding items, Google earned $9.50 per share, missing the consensus estimate of $10.49 per share.

Google's share price surged higher into the close prior to the earnings release on Thursday creating an Island top, which is a reversal formation. Until this level of $634 is breached, Google will likely remain under pressure.

GOOG has been supported during the first month of the year, climbing slowly along with the 50-day moving average near 619. Thursday's upward movement pushed above resistance levels near the 20-day moving average at 639.00. During Friday's trading session, GOOG broke through the 50-day moving average and then quickly targeted support near the 100-day moving average near 584. Long-term support is seen near the 200-day moving average at 562.00.

Despite the recent slow movement higher, the MACD has been pointing to negative momentum, as the signal line is down near -2.5. This means that the spread between the 12 and 26 day moving averages, when compared to the 9-day moving average of the spread is negative. Both signal lines are pointing lower, which could generate further negative momentum.

The relative strength index (RSI) is in neutral territory but barely near 33, which has declined from the overbought 70 level which was last seen in early January. A close below 30, could signal that the large down move is oversold.

When analyzing a weekly chart, Google has hit resistance levels near 640 multiple times during the past 100-weeks. This attempt is the 4th try to breach the $640 level. The 9% drop in GOOG had a dragging after on the overall NASDAQ.